Any investor suffering fatigue from the headlines of volatility in the stock market will be relieved by the latest data from Wall Street. The stock market has now sustained five consecutive days of growth, making 2019 the best January opening since 2006.
- The Dow Jones Industrial Average, a major benchmark, had gained 2.89% for the year when trading closed on Thursday.
- The S&P 500 index is also performing well, with a gain of 3.58% since the beginning of the year.
- The tech-heavy NASDAQ Composite has performed even better, gaining 5.3% for the year to date.
What’s Driving the Stock Market Market?
Several factors have contributed to this new-found confidence. The Federal Reserve has now indicated on multiple occasions that it is likely to slow down the pace of rate hikes in 2019. Some analysts predict that the federal rate will remain stable until at least May. Confidence surrounding rates is big news for investors, as Fed worries contributed to the eventual loss of most gains in 2018.
Trade was another major factor that influenced volatility last year. An ongoing war of tariffs with China left markets uncertain. Smaller disputes with Europe, Canada, and Mexico also caused jitters.
President Trump has resolved most of the key issues with North American and European trade partners. China is now the primary focus. Both China and the U.S. agreed to stop applying tariffs last December, with the provision that a new trade agreement is drafted by March of this year.
Trade representatives met in Beijing this week and there was positive news from the negotiations. Investors are now optimistic that a trade deal could be reached before the second quarter of this year.
Concerns of Slow Economic Growth
While stock markets are up this week, the cooling economy could make for a slow 2019.
Corporate earnings this year are likely to be less impressive than 2018. This could leave investors cautious and less bullish overall. However, because of major volatility in recent months, some analysts believe that lower earnings are already factored into current pricing. This could allow for gradual growth across sectors.
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